What is the last phase of the audit? The audit strategy phase The reporting phase The risk response phase The risk assessment phase Two audit managers assigned to an engagement are discussing the concept of materiality with a new staff associate. The staff associate in question has raised some queries about performance materiality, and is trying to glean a better understanding of this area. Which of the following statements would be most appropriate to advise the staff associate? Performance materiality relates to individual accounts and assertions, and should always be greater than planning materiality for the same account or assertion. Planning materiality is used by the external auditors to help determine the nature, timing, and extent of audit procedures to be conducted. Performance materiality and the overall materiality assessed by the auditor is a subjective determination undertaken by the auditor before the audit starts. Performance materiality will be less than planning materiality, and should be lower than materiality for individual accounts and transactions. The price-earnings (PE) ratio could best be defined as how much a stockholder is willing to pay per dollar of earnings being closely related to the dividend discount model the value of the stock on the open market what dividend percentage payout the stock pays